ETF inflows are set to exceed €100 billion in 2023 as the asset class has become increasingly popular with individual investors and financial advisers in Europe, according to BNP Paribas.
In partnership with Quantalys Harvest Group, the firm reported ETFs performed well in 2022, recording €67 billion in inflows.
This trend continued in 2023 as ETFs attracted inflows of €40 billion in the first three months, whereas net flows in actively managed funds were flat.
The report revealed financial advisors are increasingly using ETFs in their fund selection, leading to high inflows in the asset class.
ETFs are becoming more attractive to individual investors through digital platforms, such as online brokers and finance apps.
Lorraine Sereyjol-Garros, global head of ETF at BNP Paribas, said: “Our client base is also expanding, helped by the growth drivers of private banking and wealth management,”
“In particular, this is due to digital platforms, which are very popular with millennials and allow savers to familiarise themselves with ETFs.”
ETFs are also gaining popularity in the life insurance market in France, increasing the number of ETFs in contracts.
The research revealed the number of contracts containing at least one ETF rose from 38% in 2021 to 44% in 2022.
These contracts referenced an average of 31 ETFs in 2022 compared to 20 in 2021, an increase of 55%.
Inflows into ETFs also increased because ESG ETFs are continuing to gain popularity.
ESG ETFs recorded net inflows of €44 billion in 2022, whereas non-ESG ETFs reported €24 billion of inflows.
As a result of the increased popularity of ETFs, BNP Paribas anticipates inflows into ETFs will continue to rise in 2023 and exceed €100 billion.
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